I see no problem cutting a hole in the lid as long as you make an attempt to insulate it and keep critters from coming in.
I am contemplating cutting a hole in the lid to make a coffin box on top and create some counter space as well in lieu of having the taps mounted to the collar.
Similar to this:

Or this I want to use an off the shelf item - these are pricey though.

You need to provide an airspace between the wood and the metal of the chest freezer so the exterior of the chest freezer can expel the heat (and the back remains open), but is a nice clean look.
For the moment I have no collar at all - just some perlick faucets laying inside old 2 gallon ice cream buckets inside the chest freezer.